SCHEDULE 4

PERFORMANCE REWARD GRANT

Total potential grant

If the Council meets or exceeds all of its performance targets in Schedule 1 to the Local PSA, the total grant will be equivalent to 2.5 per cent of the Council’s net budget requirement for financial year 2002/03. The net budget requirement for the Isle of Wight Council in that financial year was £132,993,000. The total potential grant is therefore £3,325,000.

The division between targets

The total potential grant is divided equally among the targets.

Where a target has sub-targets, unless otherwise specified the potential grant for the target is sub-divided equally among the sub-targets.

The reward for achievement on a target

The proportion of potential grant that is payable is the same as the proportion of the enhancement in performance that the Council achieves for each target or sub-target, subject to a maximum proportion of 100 per cent and a minimum of 60 per cent. If the proportion would be less than 60 per cent, nothing is included in the grant in relation to that target.

Payment of the grant

Main grant

The grant will be paid in two equal instalments in the financial year following the end of the Local PSA period, and the next financial year, subject to the qualification below relating to interim payments on account.

Interim payment on account

Where the Council and the Government have agreed an interim level of performance in relation to a target (or sub-target), as specified in Schedule 1, and the Council achieves it, the Government intends to pay one-fifth of the relevant potential grant in the financial year before the first year in which the main grant would be due. This is treated as a ‘payment on account’. The definitive calculation of the grant will be made as described above. The balance of the grant entitlement will be paid in equal instalments in the two subsequent financial years. If the definitive calculation yields a grant entitlement less than the ‘payment on account’, the excess will be recovered.

Half of each instalment of the grant will be paid as a capital grant, and half as a revenue grant.